Small Business Loans for Women
Despite the boom of small businesses in the US, it’s not getting easier to find financing for your company. And because of the wide gap between the success women achieve in business and the financing options available to them, the difficulty of financing a business is also imbalanced.
Luckily, there are now financing options made specifically for women. We’ll discuss these small business loans for women, how to use them, and why they’re more crucial today than ever before.
Why Do We Need Small Business Loans for Women
Women-owned businesses are a big chunk of the market, generating up to $1.8 trillion in annual revenue. A woman owns four out of every ten businesses in the US, and this trend is doubling every single year. Female entrepreneurs collectively create 9.2 million job opportunities for many Americans.
Unfortunately, getting financing for these businesswomen isn’t easy. Research shows that only 25% of them apply for a business loan, and they typically borrow $35,000 less than their male counterparts. A Federal Reserve report also states that female entrepreneurs don’t get approved for financing as often compared to their male counterparts.
Indeed, small business funding for women is severely lacking, and this has a detrimental effect on the economy. Historical data has shown that female entrepreneurs have higher revenue potential than male-led enterprises.
Small Business Loans for Women-Owned Businesses
Fortunately for female entrepreneurs, an increasing number of business loans for women are becoming much more available with each passing year. The number of women’s small business grants in 2020 has seen a significant jump.
If you’re one of the many women in the US running a business, here are some of the best small business loans in 2020 that are open to you.
SBA 7(a) Loans
This is one of the most common SBA loans in 2020 that many women apply for. It’s a loan offered by an accredited lender that’s guaranteed by the Small Business Administration (SBA).
An SBA Loan allows women to infuse up to $5 million, with average repayment periods of 5 – 10 years, or up to 25 years for real estate purchases. The best thing about SBA loans is that they have one of the lowest interest rates for women who have excellent credit scores (620 or more).
Microloans
Microloans provide much smaller amounts compared to other women’s business loans and grants, with an average loan amount of $13,000. This loan type is designed for female entrepreneurs with smaller operations, such as home-based businesses or food trucks.
Small business microloans are a good option for applicants who don’t qualify for any other private or federal loans for women. They have average interest rates of around 8 – 13 percent, with repayment terms of 6 years.
Online Business Loans
There is an increasing number of third party online lenders—like L3 Funding—that offer fast and convenient access to merchant funding. For those looking for a startup business loan for women, these lenders are a fantastic option.
The main benefit of getting an online business loan is that the application process is usually faster. Requirements are less strict, and borrowing limits are often generous. Finally, the interest rates and repayment period is also flexible and competitive.
Working Capital Loans
Most small business loans for women are used as working capital for their companies. These loans provide funding that’s used for the daily operations of the business, which typically involves buying inventory or making payroll.
Business Line of Credit
A secured business line of credit allows you to borrow funds on-demand, as you need it. The main benefit of this is that you only repay for funds that you actually use. It’s great for dealing with emergencies or off-peak seasons when revenue is lower.
How to Use Small Business Loans for Women
A small business loan can be used to finance anything that’s related to growing a company. This, of course, covers a wide range of situations. Here are the most common uses of funds:
- Buying or repairing equipment: loans can be used to purchase new equipment to increase the output or efficiency of the business. It can also be used to repair existing equipment.
- Buying inventory: filling up inventory is the most common way loan funds are used. It’s especially useful during the holidays, where you might need to cover a more significant demand.
- Marketing expense: the added funds can be used to finance digital and offline marketing campaigns, such as running ads on Facebook or getting an influencer to promote the brand.
- Hiring new employees: extra funds can be used to hire new employees to expand the business, or to train existing ones.
If you’re a woman business-owner in need of financial help, L3 Funding can give you easy access to flexible financing with competitive rates. Apply now and learn why we’re the go-to financial resource for small businesses.